February 1, 2010
Hometrack : House Prices Up 6th Month In A Row!!
U.K. house prices rose for a sixth month in January as a shortage of homes for sale supported property values, Hometrack Ltd. said.
U.K. house prices rose for a sixth month in January as a shortage of homes for sale supported property values, Hometrack Ltd. said.
The average cost of a home in England and Wales increased 0.1 percent, the same as in the previous month, to 157,100 ($252,000), the London-based research group said in a statement today. From a year earlier, it dropped 0.8 percent.
With the property market showing signs of strengthening and the economy exiting recession, the Bank of England may this week pause emergency bond purchases after buying 200 billion pounds so far, economists say. Hometrack cautioned that the housing pickup reflects distortions and a lack of supply that mask underlying weakness of demand.
There is a risk that the “skew in transactions, towards higher value property in better-off areas, has led to the general health of the housing market being overstated,” Richard Donnell, director of research at Hometrack, said in the statement. “Weaker demand and the fact we are starting from a higher base than a year ago means the outlook for 2010 remains far from certain.”
Other data suggest the pickup in house prices is enduring so far. Values jumped 1.2 percent in January, the most in five months, according to Nationwide Building Society.
Bank of England policy maker Andrew Sentance said last week that there is scope for a “much stronger” housing market recovery if bank credit eases and interest rates stay low.
Mortgage Approvals
Home loans are also increasing, supporting demand. Banks probably approved rose 61,800 mortgages to buy homes in December, according to the median forecast of 18 economists surveyed by Bloomberg. The Bank of England will release the figures at 9:30 a.m. today in London.
Looming elections, which must be held by June, may yet slow demand for homes and weigh down property prices in coming months, Donnell said.
“Growing talk of pressure on earnings together with the threat of major cuts in public spending are likely to weigh heavily on households when deciding to buy or sell a home in the months ahead,” Donnell said. “The prospect of an election in May will simply add to the uncertainty in the near term and is likely to suppress market activity.”
The Bank of England will on Feb. 4 pause its asset-purchase program, according to the median forecast of 51 economists in a Bloomberg News survey. All 61 economists in a separate survey say policy makers will keep thebenchmark interest rate at 0.5 percent.
